US Treasury Proposes Rule on High-Tech 10/23 06:05

   The U.S. Treasury Department proposed a rule Thursday to crack down on 
American high-tech investments such as supercomputing and artificial 
intelligence in China, Russia, North Korea and other "countries of concern."

   WASHINGTON (AP) -- The U.S. Treasury Department proposed a rule Thursday to 
crack down on American high-tech investments such as supercomputing and 
artificial intelligence in China, Russia, North Korea and other "countries of 
concern."

   The U.S. government has been working for years to deny China and other 
adversaries investments that could help them boost their military power.

   That program began in 2023 when then-President Joe Biden signed an executive 
order putting restrictions on outbound U.S. investments in sectors such as 
semiconductors, quantum computing and artificial intelligence going into China. 
Treasury later established the Outbound Investment Security Program.

   In December 2025, Congress passed a law that codified and expanded the 
program to target more technologies and more foreign countries, including Cuba, 
Iran, North Korea and Russia.

   The inclusion of Russia in the proposed rule has come days after President 
Donald Trump waived sanctions on Russia following a diesel deal with President 
Vladimir Putin.

   The rule announced Thursday would expand the restrictions to cover 
investments in hypersonic systems capable of traveling at five times the speed 
of sound, supercomputing, biotechnology and artificial intelligence, though 
Treasury used Trump's favored term for AI, "superintelligence" or SI.

   The proposed rule "sends an important signal to markets that Washington is 
tracking where U.S. capital is flowing and what capabilities it is helping 
build," said Craig Singleton, a senior fellow at the think tank Foundation for 
Defense of Democracies.

   The screening of outbound investments "recognizes that capital can 
accelerate military-relevant capabilities just as surely as technology transfer 
can," Singleton said.

   Jason Chipman, a former Justice Department lawyer who specializes in 
cybersecurity, investment rules and export controls as a partner at the law 
firm WilmerHale, said the new rule "will require more substantial compliance 
programs to manage risk."

   Treasury's rule to implement the 2025 law -- the Comprehensive Outbound 
Investment National Security Act -- would only apply to investments that exceed 
$50,000 and would exclude many financial investments, including stock purchases.

   Treasury will hear public comments on the proposal before issuing a final 
rule.

   "It's just the first step in a fairly long process to get to changes which 
presumably will be more enforcement-minded, to put more teeth behind the 
outbound investment program," said former U.S. trade official Ryan Majerus, now 
a partner at King & Spalding law firm.

   In Beijing, the Chinese Foreign Ministry said the U.S. should abide by the 
principles of a market economy and stop interfering in normal economic and 
trade cooperation between businesses.

   Asked about Washington's proposal to add biotechnology to the list, ministry 
spokesperson Mao Ning said that "Overstretching the concept of national 
security, taking discriminatory measures against specific countries, and 
artificially restricting trade, economic and investment activities serve no 
one's interests."

   She added that China will closely monitor relevant developments and take 
necessary measures to safeguard its interests.

   Since Trump's first term, the United States and China -- the world's two 
biggest economies -- have been locked in an economic and tech rivalry. They've 
restricted the export of sensitive technology and critical products -- such as 
China's rare earth minerals and America's advanced computer chips -- to each 
other and slapped tariffs on each other's products. Trump and Chinese President 
Xi Jinping agreed last year to ease tensions while they engaged in talks, a 
temporary truce they last month extended into January.

   But the sparring continues. In July, the Treasury Department issued a 
$200,000 fine against a U.S.-based company for failing to report to the 
department a $92,500 investment in a Chinese artificial intelligence and 
robotics company by one of its subsidiaries.